Analyzing and forecasting the Gulf Cooperation Council's geopolitical environment

Can Saudi Arabia’s Aid Policy Pay Off?

By Sumaya Almajdoub
April 12, 2016

In November 2015, Saudi Arabia pledged over USD 2 billion of aid to Sudan for its support to Operation Decisive Storm in Yemen and, more recently, the kingdom suspended over USD 3 billion of military aid to Lebanon’s army. These two actions illustrate Saudi Arabia’s attempt to utilize its economic power to shape regional political outcomes across the Arab world. But what are Riyadh’s objectives in Yemen and Lebanon? How does the kingdom use aid as a foreign policy tool?

Providing aid has enabled Saudi Arabia to accumulate soft power and to assert its image as a benevolent leader in the Arab and Muslim World. But ‘Riyal Politik’ alone may not help officials in Riyadh achieve their regional goals.

A Fragmented Aid System

Saudi Arabia is a generous international donor. According to one study conducted by the Global Public Policy Institute, the country donated over USD 90 billion or 3.7 percent of its gross domestic product (GDP) between 1975 and 2005. The same study found, however, that the Saudis lack an articulated and coherent aid policy.

Saudi foreign assistance comes in many forms. The first is humanitarian aid, which aims to provide immediate relief for crises. During the 2010 Pakistan floods, private and public Saudi donations exceeded USD 240 million. The second form is development aid, which invests in funding long-term poverty alleviation projects, including services and infrastructure. This includes projects to build roads, provide water and electricity in rural areas, and build medical and educational facilities. Although altruistic motives can drive both humanitarian and development aid, this foreign assistance undoubtedly factors into the soft-power aspects of Riyadh’s foreign policy.

The third category is military aid in the form of arms deals, which can help achieve two goals. It aims to strengthen the internal security apparatus and military forces of the kingdom’s allies such as Egypt and Pakistan. Furthermore, military aid packages often include long-term contracts with arms manufacturing companies such as the French ODAS. These companies become responsible for periodical maintenance, upgrading of systems, and training of their clients’ forces. Consequently, this commitment helps solidify Saudi Arabia’s economic and security ties with these companies and their countries of origin, whether it is France, the United Kingdom, or the United States.

Finally, Saudi Arabia grants loans, investments, and oil assistance to various countries to help stabilize their economies and shore up their currency reserves. Egypt’s economy has relied on the GCC’s assistance particularly since the July 2013 coup led by General Abdel Fattah El-Sisi. In December 2015, the Saudis announced their latest USD 8 billion aid package to Egypt, scheduled to be delivered over the next five years.

Despite these massive inflows of aid, the lack of coordination between various decision makers and multiple agencies has fragmented the Saudi aid system. Decision makers — the Royal Court, the Ministry of External Affairs, the Ministry of the Interior, and the Ministry of Finance — decide where to allocate aid and how much, but they do not deliver the aid themselves. Institutions such as the Saudi Red Crescent, various royal foundations, the International Islamic Relief Organization, and the Saudi Fund for Development are responsible for managing aid delivery. The lack of a central organization or mechanism to coordinate between these different institutions has led to limited synergy and a duplication of efforts. Finally, the shortage of extensive data on aid stems from the lack of systematic reporting and evaluation of aid programs in both Saudi Arabia as a donor country and in countries receiving the kingdom’s aid.

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Sumaya Almajdoub is a Middle East analyst based in Washington, DC.